Paylocity Holding Stock Earnings Reports

Paylocity reported a strong start to fiscal 2026: Q1 total revenue was $408.2M, up 12% year-over-year, with recurring and other revenue up 14%. The quarter beat the top end of guidance by $5.7M and management raised full-year fiscal '26 revenue and profitability guidance. Adjusted gross margin improved to 75.1%, adjusted EBITDA was $146.4M (35.9% margin) and adjusted EBITDA beat the top end of guidance by $11.4M. Management highlighted accelerating adoption of its AI-enabled platform (AI assistant usage more than doubled, >1.2M questions answered), the launch of Paylocity for Finance (and early traction integrating finance and IT capabilities) as drivers of higher ARPU and cross-sell, and continued strong broker-channel referrals (broker channel >25% of new business). The company repurchased nearly 1.2M shares ($200M) in Q1 and has ~$500M remaining on the repurchase authorization. Management increased long-term targets materially: revenue target raised from $2B to $3B, adjusted gross margin target to 80%+, adjusted EBITDA margin target to 40–45%, and free cash flow margin target to 25–30%, while trimming long-term S&M and stock-based comp targets. They plan continued R&D investment (total R&D up ~16% y/y in Q1) while driving margin leverage via automation/AI and operational scale. They also called out a one-time FY26 free-cash-flow benefit of ~$65M from recent tax law changes. Client retention remains strong (~92%+), demand was described as stable across segments, and management expects to continue investing in product, go-to-market, and AI-driven efficiency while maintaining prudence in quarterly guidance.